Commentary on business landing drop

Given the expectation of a 3.8% contraction in bank-to-business lending this year, one of the steepest declines in recent history, Tim Vine, Head of International Finance & Risk Solutions at Dun & Bradstreet, said: “Small businesses are the backbone of the UK economy, accounting for almost all private sector employment. And yet, in the current economic environment, they’re at most risk of foreclosure – and little is being done to mitigate that risk. As bank to business lending contracts sharply again in the first quarter of this year, we can expect all UK businesses – whether large, small, or in between – to face a hyper disruption of supply chain challenges, energy costs crises, and extortionate credit costs, as the much-discussed recession looms. Even before the most recent turmoil, Dun & Bradstreet research found that 61% of SMEs are struggling to repay loans, with a large part of this likely attributed to the late payments’ crisis, with UK SMEs owed an average of £150,000 annually. And, with Covid loan repayments becoming due, this places further pressure on cashflow.

“As economic disruption affects SMEs in a variety of ways, businesses will need to leverage data, tools, and intelligence to identify both challenges and opportunities. This could include automating the credit-to-cash process, understanding risk distribution throughout the supply chain, and reviewing previous payment performance. This open, data-driven approach to financial reporting and evaluation will also enable lenders to make informed decisions and approve much-needed funding. Businesses that use data in this manner will not only have a firm grasp on risks but will also improve their competitive position by being able to adapt to future challenges.”